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In this issue:Everyone should have an estate plan |
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Welcome to another edition of “CommonCents” - our newsletter designed to keep you connected. 2009 has been an unusually tough year for investors. The global financial crisis and a massive cycle of debt reduction or ‘de-leveraging’ around the world has led to continued waves of market volatility. Returns across nearly all sectors have been among the worst on record. Our economy, although battered has remained resilient and is posting growth results second to none amongst other developed nations of the world. This gives us continued confidence that although the recession has been difficult, it may well prove in history to be a very shallow one. Does that mean that we no longer will feel the pain of the past 18 months? No! Unfortunately the unsteadiness in the world's economy will continue for a while yet, and we will continue to hear bad news. But, we can continue to find opportunities to weather the storms ahead, protect ourselves and our families and prepare our financial position for better days. Let’s not forget that eventually storms do pass and if we hold onto our plans for the future and stay focused on our long term financial goals, then they will be achieved.
Scott Kirkwood. Director & Private Client Adviser.
Everyone should have an estate planYou’ve worked hard to build your assets – your investments, home and personal property. Doesn’t it make sense to work just as hard to protect them in the event something should happen to you? That’s the primary goal of estate planning – to protect, preserve and manage your estate if you die or become disabled. Some people may see no need for estate planning until they reach a certain age, or they might believe that it’s only for the wealthy. But in truth, it’s wise for everyone to begin the estate planning process as early as possible. Why is estate planning so important? Because it allows you to accomplish a number of crucial objectives:
Without an estate plan, the fates of your assets and your loved ones may be decided by attorneys, government bureaucrats and tax agencies. Taxes and attorney’s fees can eat away at your estate, and distribution of your assets could be delayed at a time when your heirs need them most. So why doesn’t everyone have an estate plan? Aside from a natural reluctance to face our own mortality, some people are put off by the belief that estate planning will be complicated, time consuming and costly. In fact, setting up an estate plan doesn’t have to be a complex process. Estate planning can begin with something as simple as reviewing the beneficiaries of your insurance policies and retirement accounts and updating them as appropriate. It may involve adding one or more heirs as co-owners of your home, bank and brokerage accounts or other assets. To make sure all your wishes are carried out, you’ll need to draft a will and perhaps establish one or more trusts, but even these activities can be handled in a few brief meetings with an estate attorney. Most people can address their estate planning goals with the simple, four step process outlined below:
We have partnered with Cusoff Cudmore Knox (CCK), a leading Adelaide law firm focused on providing services of the highest quality. Similar to the wealth process, CCK will take the time to understand your personal circumstances before providing advice on your estate planning needs. As a result of this partnership, Bernie Lewis Wealth Management clients will receive a 20% discount in their fee from CCK. For further details please contact your financial adviser. Superannuation adequacy holding upIn what appears to be a contradictory result, the AMP Superannuation Adequacy Report released last month suggests retirement adequacy has actually improved in Australia despite the global financial crisis. The report identified an average fall in superannuation balances of 6.5% per member, equating to $2,782, but pointed to the fact that in circumstances where average total contribution rates held ground at 12.5%, people were actually slightly better off. It said that for pre-retirees aged 60 to 64, the average contribution rate actually increased to 22.8%, up 0.6 percentage points over the previous six months. The report found that at current contribution rates, the average superannuation benefit for those currently in the workforce would provide an income of $21,631 a year in today's dollar terms and that when combining superannuation, other investments and the age pension, today's workers would have an average projected retirement income of $42,465, which is 1.1% up on the same period last year. One of the least surprising elements of the report was that it found those aged 50 and over experienced the largest absolute impact of negative market downturns, with older members' superannuation balances hardest hit because they had fewer years in the workforce to recover their losses. “Retirees will rely on the Government for the age pension to supplement retirement savings and superannuation following the impact of the global financial crisis,” said Scott Kirkwood. “While it’s understandable that some investors may be unhappy with their super returns, it’s important to note that super continues to be one of the most tax-effective investment vehicles around”, Scott said. Within super, concessional contributions (eg employer and salary sacrifice contributions) and investment earnings are taxed at just 15%. After age 60, withdrawals, including lump sums and pension payments, are 100% tax-free. 
Financial marketsThe first quarter of 2009 was mixed for share market investors, with pessimism being the dominant influence. By March, however, a sense of optimism began to return to equity markets in particular, as investors started to feel the worst of the global financial market crisis had passed. The outlook for the remainder of 2009 is positive, as we expect optimism to continue and for the economic recovery to gather momentum. Click here for the full outlook. Housing marketThe property market. A bright spark amidst the gloom.Last year, Professor Steven Keen predicted Australian house prices would dip 40%, peak to trough – a forecast more bearish than any other prominent economist could muster. His dire predictions sent a chill down the spine of home owners nationwide. Lucky for us, so far he is being proven wrong. Although there is risk there could be further pain in the Australian housing market, optimism seems to be accompanying the green shoots which are apparently sprouting. The RP Data / Rismark national hedonic index shows median dwelling values have gained 2.7% in the 12 months to the end of June. Houses have gained 2.2% and apartments 4.2%. It was inevitable that the pressures of the global downturn would slow the property market; however it has remained relatively stable especially when compared to the double-digit falls experienced by other international economies. “There are many encouraging signs, importantly, the accessibility to home ownership has improved considerably for many Australians,” said Mark Lewis, Executive Chairman of Bernie Lewis Home Loans. “Twenty nine percent of all owner occupier finance commitments were taken on by first home buyers; up from 17% a year ago. The number of first home owner grants issued in June and July were at record levels suggesting that first home buyer demand is not yet winding back,” Mr Lewis said. This is a really positive sign for the property market and shows that investors are starting to regain their confidence while the main driving factor for first home buyers are low interest rates and the availability of the First Home Owners Boost
Whether it is just for a quick chat or to make an appointment, please contact us at one of our offices or on email infowm@bernielewis.com.au. Office Locations
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